With growth slowing, particularly in the real estate sector, Chinese banks have been a great place to bet against, hedge fund titan Jim Chanos told CNBC.

Chanos, the head of Kynikos Associates, has been betting against China — despite its role as a global economic leader — primarily because he believes the country is overbuilt and does not have the internal demand to support its ambitious growth plans.

Nowhere has that trend been more apparent than in the banking system.

"If you looked at the performance of the banks over the last two years...they have been great shorts," Chanos said during an interview on "Squawk Box." "They have been going down — they're down 30 percent over the last two years."

An exchange-traded fund that tracks the Chinese banks, the Global X China Financials , is off about 27 percent since peaking in November 2010.

Much like in the U.S., there has been talk about breaking up China's large financial institutions because of the danger their failure would pose to the broader economy. And, like the American quandary, taking down the big banks is be easier said than done.